IPM February 2015 Secured

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February 2015

Has the Rubiks Cube finally solved the shape mark puzzle?

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e-alert online now

Writing the UPC rulebook Exclusive interview with the

patent court rule master Focus on gTLDs and Asia In-depth articles on new domains

plus the worlds IP frontier Legal decisions Huawei v ZTE, Amneal v Supernus, DDR

Holdings v Hotels.com, plus much more!

18+ Hours of Networking 26 CPD Points 55+ Speakers

Keynote Speakers

Europes leading pharmaceutical law conference on competition law, patent litigation, regulatory frameworks and licensing and collaboration agreements

Tuesday 19 - Thursday 21 May 2015, Hotel Metropole Brussels, Belgium

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EU PHARMACEUTICAL LAW FORUM

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Paul Csiszr Director Basic Industries, Manufacturing and Agriculture, Responsible for Pharmaceutical Antitrust and Merger Cases, DG Competition European Commission

Michael Koenig Deputy Head of Unit European Commission

Florian Schmidt Legal Officer European Commission

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DAY 1: COMPETITION LAW AND PATENT LITIGATIONCompetition Law and Patent Litigation and the Interface with Regulatory Frameworks Evening Seminar: Second Medical Use Claims

DAY 2: REGULATORY FRAMEWORKSTransparency of Clinical Trial Data, Pricing and Reimbursement, Data Protection, Data Exclusivity, Unlicensed Use and Off-Label Use, Adaptive Licensing, Medical DevicesEvening Seminar: Biosimilars and the Regulatory Frameworks

DAY 3: LICENSING AND COLLABORATION AGREEMENTS Negotiation, Commercial IP, Due Diligence, Obligations to Exploit, UPC, Alliance Management, Termination ProvisionsEvening SeminarAsset Centric Corporate Structures

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Well that started with a bang. A flurry of judgments at the end of January have kept us busy here at IPM, some of which we tried to shoehorn in this issue.

With that in mind, it might seem strange that we devote significant page count to one of the oldest, most talked about, issues in IP the Unified Patent Court (UPC).

An interview with the most patient man in patents, Kevin Mooney (p6), kicks off our coverage. His task, to deliver the UPCs rules, is surely one of the greatest efforts in compromise and cooperation in European history.

While Mooneys journey is almost at an end, that of the 40-year-old UPCs is just beginning. You would be hard-pressed to find someone more knowledgeable about the court project than Winston & Strawns Richard Price. His account of where weve come from and where we are today (p8), reminds us that one of the positives to come from decades of negotiation is a greater understanding and appreciation between European IP systems.

The patent community has never been closer, which is not to taken for granted in light of the chaos facing European copyright.

I dont think anyone is really expecting President Junckers Digital Single Market to rid the continent of copyright altogether. But something for its much-harried lawyers to reflect on: would a pan-European project of this nature be such a bad thing, if it brought EU members copyright systems closer together?

WELCOME TO THE FEBRUARY ISSUE OF INTELLECTUAL PROPERTY MAGAZINE

Intellectual Property Magazines advisory panel is made up of private practice and in-house lawyers around the world. Each panel member specialises in one or more areas of intellectual property, and has an important role in advising the editor on the content and direction of IPM. Membership is reviewed annually.

INTELLECTUAL PROPERTY MAGAZINES ADVISORY PANEL

Susan Hinchey, corporate trademark manager, Allergan, USKenneth Adamo, partner, Kirkland & Ellis, USTimothy Wilson, senior IP counsel, SAS Institute, USKevin Mutch, group legal director, Faberg, UKDaniel Glazer, partner, Fried, Frank, Harris, Shriver & Jacobson, USCydney Tune, counsel, Pillsbury Winthrop Shaw Pittman, USGreg Novak, managing partner, Novak Druce & Quigg, USSteven Garland, partner, Smart & Biggar/Fetherstonhaugh, CanadaDaniel Bereskin, founding partner, Bereskin & Parr, CanadaConnie Carnabuci, partner, Freshfields Bruckhaus Deringer, Hong KongWes Jones, partner, Baldwins, New ZealandJohn Hackett, AJ Park, New Zealand

Simon Clark, partner, Berwin Leighton Paisner, UKEvie Kyriakides, regional trademark counsel, Europe, Russia and CIS, Mars, UKChristopher Thornham, partner, Taylor Wessing, UKFrederick Mostert, group chief counsel, Richemont Group, internationalJustin Watts, partner, Freshfields Bruckhaus Deringer, UKDavid Taylor, partner, Hogan Lovells, UKPatrick Melson, head of trademarks, Reckitt Benckiser, UKFrancis Hagel, intellectual property advisorPaul Tauchner, partner, Vossius & Partners, GermanyClaus Eckhartt, partner, Bardehle Pagenberg, GermanyJulia Holden, Trevisan & Cuonzo Avvocati, ItalyDominic McGonigal, chairman, C8 Associates, UK

From the Editor

Intellectual Property Magazine 3www.intellectualpropertymagazine.com February 2015

Want to subscribe? See inside back cover for details...

Tom Phillips, Acting editor

ContentsRegulars3 Editors letter6 IPM Interview Radical change is on the horizon for the EUs patent regime

in the shape of a new Unified Patent Court. But with such a colossal task, Kevin Mooney explains the importance of making, not breaking, rules

76 Classified Directory of international IP firms

81 Movers and shakers Latest appointments and company news

82 Clocking off IP curiosities from around the world

Opinion8 A difficult, but necessary journey Having kept a keen eye on the UPCs progress over the decades,

Richard Price looks at the remaining issues

11 The unitary patent and the Unified Patent Court an update

After four decades of development, legal challenges and false-starts, it seems that a unified EU patent system is imminent

13 Commil v Cisco The US is in the midst of rethinking defences to inducement of

patent infringement. Charles T Steenburg examines the case

15 Door opened for medical use claims in Canada

A Canadian Federal Court has rejected hitherto guidelines on unpatentable methods of treatment, such as fixed drug dosage schedule

16 Shape of childs chair not registrable as a trademark

Avoid the Tripp Trapp! Farah Mukaddam discusses the CJEU ruling on the validity of shape marks in Hauck v Stokke and Ors

18 Solving the Rubiks Cube challenge COVER STORY

The EU General Court held that the 3D puzzles shape mark is a valid trademark

21 Taste tactics The US Patent and Trademark Office has yet to approve a taste

trademark for registration. Anjie Vichayanonda explains how to acquire and enforce such rights

24 Judicial review of UK private copying exception

The Musicians Union et al have applied for a judicial review of the UKs private copying exception. Ben Gisbey and Dorothea Thompson examine what it could mean for consumers

26 Undressing the design copy issue Tribal wars: a review of John Kaldor Fabricmaker v Lee Ann

Fashions

27

28 Brand strategies in the new gTLD era Alexandre Nappey explores the strategies being used by trademark

owners to prepare for the TLDs reforms

30 Developing a defensive domain name strategy

With cybersquatters still an ongoing problem, Gary McIlraith explains how to establish a domain name strategy that works

32 Cyberswatting: eradicating domain name pests

Domain name governing body ICANN has been running its method of dealing with cybersquatters since 1999, but how has it coped with gTLDs?

4 Intellectual Property Magazine February 2015 www.intellectualpropertymagazine.com

Focus on gTLDs

Dawn of the data

74

Intellectual Property Magazine 5 www.intellectualpropertymagazine.com February 2015

Feat

ures 45

TTABs likelihood of confusion rulings B&B Hardware may significantly influence brand owners trademark

policing and enforcement decisions

47 Tackling Tacking Is trademark tacking a question of law or fact?

49 New approaches to piracy protection Rightholders can tackle online pirates more effectively by targeting

the first few pages of search engine results, says Bill Freund

50 Trademark crash: Volvo v OHIM A look at Volvos trademark opposition against Lovol

52 Patent reform: back on the table but late to the party?

Is the Innovation Act back on?

54 Whats wrong with UK innovation? The UK needs to get better at turning great ideas into products for

the global market

55 UPC recap: have you been paying attention?

An essential review of the journey so far

Focus on gTLDs 35

Focus on Asia

36 Updates from China latest regulations on the protection of privacy

Eugene Low reviews judicial regulations on issues arising from the infringement of privacy on the internet

38 How China claimed the global patent throne Recent research has underlined the extraordinary growth of patenting

in the Peoples Republic, explains Bob Stembridge

41 IP & SMEs in China The UK Intellectual Property Offices China IP attach, Tom Duke, provides tips

on how UK SMEs can seek advice when doing business in the country

42 Patent battle Patent owners must approach infringers with caution if they are to ultimately

succeed in pharmaceutical litigation in Thailand Stra

tegy

Lega

l Dec

isio

ns 58 Huawei Technologies Co Ltd v ZTE Corp; ZTE Deutschland GmbH A review of competition law regarding injunctions for FRAND-encumbered patents

60 lntra-Presse SAS v Office for Harmonization in the lntemal Market and Golden Balls Ltd

GOLDEN BALLS makes its way back to OHIM

62 Amneal Pharmaceuticals, Llc, v Supernus Pharmaceuticals, Inc

In the first trio of Hatch-Waxman IPR decisions, PTAB upholds the patentability of all challenged claims

64 Flo & Eddie Inc v Sirius XM Radio Inc, et al The recent Flo & Eddie cases against Sirius may be the wake-up call

needed to spur Congress into taking serious legislative action

66 DDR Holdings v Hotels.com After a software claim was finally found eligible subject matter

under Alice, was it the good news coders have been waiting for?

68 Dalsouple Societe Saumuroise Du Caoutchouc v (1) Dalsouple Direct Ltd (2) Dalhaus Ltd

A trademark dispute could have been avoided with written permission

70 International Stem Cell Corporation v Comptroller General of Patents, Designs and Trade Marks

Has the CJEU erred in its much anticipated ruling?

72 How outsourcing made Microsoft a patent powerhouse

After putting the company among the top-10 patent filers in the US, ex-Microsoft attorney Jeffrey L Ranck explains how to implement a successful outsourcing strategy

74 Dawn of the data Its here to stay and it could give you the edge data is an IP

portfolios best friend says Freddie McMahon

Tackling tacking47


IPM Interview

The rule maker Radical change is on the horizon for the EUs patent regime in the shape of a new Unified Patent Court. But with such a colossal task, Kevin Mooney explains the

importance of making, not breaking, rules

The Unified Patent Court (UPC) is the largest amendment to patent law across the EU in over 40 years, bringing the biggest change in the litigation landscape the continent

has seen. Comprising a Court of First Instance, a Court of Appeal and a Registry, the UPC Agreement was historically signed by 25 EU member states on 19 February 2013.

To enter into force, the treaty needs to be ratified by at least 13 states, including France, Germany and the UK. So far, only six have ratified the Agreement.1

With the additional momentous task of organising a unitary patent that will protect an invention EU-wide for the first time, things are bound to get messy. However, bringing order to the chaos is Simmons & Simmons partner, Kevin Mooney, chairman of the committee tasked with the unenviable duty of drafting the Rules of Procedure for the UPC. These rules will ultimately dictate how the UPC will operate and they reached a 17th draft at the end of 2014, resulting in an oral hearing in November.

Taking time out of his very hectic schedule, Mooney talks to IPM about balancing his day job and receiving ambush phone calls from a certain retired Lord Justice.

How did you become chairman of the committee for drafting the Rules of Procedure of the UPC?I am afraid we need to go into some history.

IPM Interview

Kevin Mooney

There was a long period where the UPC project and its predecessor the so-called European Patent Litigation Agreement were making little progress. It was only in 2007 that the EU Commission decided to start again, appointing principal director of patent law and multilateral affairs, Margot Frhlinger, to take over.

Although new to patents, Dr Frhlinger had the common sense to abandon the previous practice of the Commission to dictate what the relevant instruments creating the court would look like. Dr Frhlinger adopted a totally different bottom up approach and consulted users and others, so as to be guided by what was actually wanted. Part of this process involved setting up an expert group of judges and lawyers whom she consulted. I was one of the two UK representatives on this group. The other was Sir Robin Jacob former judge at the UK Court of Appeal.

The group met to discuss the agreement to create the court for a number of years, but very little work was done on the Rules of Procedure for the court. In February 2012, it was expected that the Agreement itself would be signed in the summer. On 3 February, the expert group was due to have a meeting with Dr Frhlinger but prior to this, the Danish presidency had said there were no resources available to draft the rules and the Commission at the same time also said the same. Also, industry was threatening to lobby governments against signing the Agreement unless the rules were published in advance. On the evening prior to

the 3 February meeting I received a telephone call from Sir Robin Jacob, who was having dinner with the other judges of the expert group. He said that they had decided to ask me to chair a small group to draft the Rules of Procedure. After considerable hesitation I said OK on two conditions: first that it had to be a very small group as you cant draft things in a large group, and I didnt really want any more than five. Second, the members nominated to the Committee had to command respect within the European Patent Community. The following day, this was proposed and agreed, though the group was expanded to seven four lawyers and three judges. The industry representatives at the meeting also wanted to be on the committee, but I said no as it would become just too large.

The Commission, helpfully before the 3 February meeting, had in effect undertaken to produce an advanced set of rules before signature of the Agreement. So we had from February to June to do the job. As the group consisted of active judges and lawyers, we agreed to work at weekends. We had three all-weekend meetings and produced the first draft for consultation by the end of March, which was pretty good going. Now three years later the work is continuing.

At the start, were you overwhelmed by the challenging task before you?I wouldnt say overwhelmed. I knew it was going to be a very heavy task but I also realised


that there was no one else to do it. I had been involved in 2006 in a similar exercise with patent judges at a meeting in Venice, when we prepared a set of basic principles that we thought the court should adopt if it were ever to come into existence. So there was already a skeleton set of principles and to some extent I was already committed.

At the end of 2014, the 17th Draft Rules of Procedure was published. How difficult is it to manage these draft rules and complete them in a timely fashion?We imposed our own deadlines. In the early stages, it was difficult because what we were doing was preparing for the first time a set of rules that would be pan-European, that would reflect not only common law but civil law practices in Europe. I used to start meetings by saying look were not here to draft a better set of English or German rules. Were here to draft a set of rules that will work across Europe. Of course everyone nodded, but this would last for 10 minutes until somebody said thats not how we do it in [X], and thats not the way we do it in [Y]. So there were some interesting sessions in the early days but I have to say, it got a lot easier as people began to realise that compromises had to be made.

What are you working on currently?My committee has now handed over final responsibility for the rules to the so-called Preparatory Committee. We handed over the 16th draft in early 2014. Final responsibility now lives with a group called the Legal Framework Group of the Preparatory Committee, which is chaired by former German judge, Johannes Karcher. However, he has asked me and my committee to remain involved, so after we handed over the 16th draft we had meetings with his group, which resulted in the 17th draft that was the subject of a public consultation in Trier. We will be meeting again to finalise the draft rules in 2015.

When you draft a document this big, with all the cross-referencing that takes place, there will always be little glitches and one of my tasks has been to maintain a document called the tracker. This records all the Is that havent been dotted and Ts that havent been crossed. When we finally sit down in 2015 we will go through this tracker and sort out the minor technical problems.

There are still some big issues that need to be sorted out, which are primarily on languages and the opt-out provisions.

How are you balancing the chairmanship with your day job at Simmons & Simmons? Im still a partner at Simmons & Simmons but Im not full time. A large part of my working

IPM Interview

week is UPC related but Im also advising the European Patent Office (EPO) academy on training the judges for the court and still consulting with Simmons & Simmons and its clients.

Do you think it is possible for the first EU patent with unitary effect to be granted by 2016?I dont think by 2016 is possible but I do think during 2016 is a possibility. Late 2016 is most likely.

There have been concerns over bifurcation. How common do you think this will be in the end?There was a lot of concern over bifurcation in the early days but as work on the rules has progressed, I think this concern has lessened. I dont think the divisions of this court will bifurcate cases that often. There will of course be times when it makes sense to, but I think these cases will be rare.

Do you think there will be a rise in competition between divisions to attract business?Yes, particularly between the major jurisdictions the UK, Germany, France and Holland, all of

whom will have local divisions and all will work in English. I hope though that this competition will be based on efficiency and quality and not on procedural games.

How important is it for the Court of Appeal to establish ground rules on bifurcation guidance?The rules give the divisions of the court a lot of discretion as to how they will operate but its important that this discretion will be exercised consistently across all divisions, otherwise you may get competition based on procedural games. So its important particularly, in the early years, that the Court of Appeal has the ability to look at how these discretions are being exercised, including how bifurcation is operating, and to lay down guidelines if necessary. This has been controversial as some think that the Court of Appeal shouldnt get involved in procedural appeals because it wastes time. On the other hand, while procedural appeals may become rare after a few years, it will be important in the early years for the Court of Appeal to ensure consistency.

How will EU-wide, multi-lingual litigation change the client and intra-firm relationship?I fully expect most divisions to eventually work in English, so I dont expect there to be too many multi-lingual problems. There will of course be competition between the various divisions and also fierce competition between law firms for European litigation. It will be interesting to see how this works out.

How are you instructing your clients to get UPC ready?I am urging my clients to start working on the issues that need working on now! They should come to a clear view as to whether they want to apply for unitary patents or to continue to apply for European patents. This is a difficult issue but they need to have a policy in place because the EPO is preparing to grant unitary patents during 2016. Secondly, they must also be considering, with regard to their existing patents, whether to opt them out of the UPC jurisdiction or not. Thirdly, if they are going to apply for unitary patents, they must consider the ownership issues that arise.

Lastly, they will have to give thought to all the jurisdictional opportunities that will arise when the court comes into existence. If they decide to opt-out patents, there will be various strategic opportunities that will be lost.

Footnote1. In December 2014, Malta became the sixth

country to ratify the Agreement, following Austria, Belgium, Denmark, France and Sweden.

When you draft a document this big, with all the

cross-referencing that takes place,

there will always be little glitches and

one of my tasks has been to maintain a

document called the tracker. This records all the Is that havent been dotted and Ts

that havent been crossed.

Richard Price

A difficult, but necessary journeyHaving kept a keen eye on the UPCs progress over the decades, Richard Price looks at the remaining issues as it shifts into what could be its penultimate year before launch

PATENT FILE


A harmonized European patent litigation system has had a long gestation. According to Sir Robin Jacob,1 it was being talked about in Germany in the 1930s during the Nazi regime. The negotiations for the European Patent Convention started in the 1960s and reached a conclusion with the coming into force of the European Patent Convention in 1973. A European Community Patent was envisaged and a European patents court to deal with disputes was also within contemplation. As it was, for nearly 40 years, all we have had is a limited type of patent dispute resolution in the form of oppositions in the EPO to patent applications that have been granted: so not a lot of progress.

In the meantime, patentees and revoking parties have had to litigate nationally, country by country, to obtain relief, whether as an injunction and damages, or in having the patent in question nullified. This may have suited some parties but, for others, it has been too costly in time as well as in money. The disparate practices and procedures of the various national courts also did and still do on occasions result in different results for the same patent. This has led to forum shopping, with a natural implication that that particular tribunal was likely to be favourable to the claimant. That clearly did not give rise to justice being done.

The UPC is born As part of the rolling programme to harmonize commercial activities in the European Union at the instance of the Commission, and partly due to the pressure from certain sections of industry, discussions resumed about having a Europe-wide patent litigation system, and with it a Community, or European Unitary, patent.

It was pressed forward by the bureaucrats as a system that should be, and would be, favourable to small and medium-sized businesses, as was the fashion at that time. That political imperative has been rather lost in transition, with hardly lip-service paid to it now. The Commission, and the Committees and Working Parties charged with seeing the project through, have had their ears bent by diligent and loud big industry groups, both in Europe and in the USA. Lawyers both private practice and of the judicial type have also got stuck into the project. The politicians, who have given the project a real shove (without which it probably would never have happened), favour a system that is quick and raw, but this inevitably would have led to rough justice. Whereas, the lawyers have fought a rear-guard action to give the new litigation system some sophistication and flexibility sensitive to the scale of the issues in question, and the commercial chips at stake. This, in my view, is entirely appropriate, given the massive effect of a pan-European injunction and the size of damages likely to be awarded.

Nevertheless, while the system borrows from the century or so of experience from around 30 jurisdictions, big and small, it will be revolutionary. Most European courts have been used to a relatively stately progress of cases to a trial, with appeals often taking a lot longer, whether as a result of leisurely timetabling

Richard Price is a partner in the London office of Winston & Strawn and head of its IP group. Price litigates all aspects of IP law and has a high success rate in securing victories for his clients before the highest courts, including the House of Lords (now the Supreme Court) and Privy Council. His practice focuses on representing clients on patents, trade dress, trademark, passing off, and copyright matters. His industry experience crosscuts several sectors, although he has particular experience in deriving IP solutions for clients working in medical devices, genetically modified crops, consumer products, electronic equipment, carbon emissions, water purification, and computer technology, in the UK and across Europe.

Opinion

It was pressed forward by the

bureaucrats as a system that should be, and would be,

favourable to small and medium-sized businessesthat

political imperative has been rather lost

in transition, with hardly lip-service paid to it now.


or of a rolling docket. Some judges have a specialist professional lifetime in patents: other judges in other countries are generalists. That contributes to the risk of conflicting, and unpredictable, results. With the new system, all that will change and quickly.

European rocket docket? European courts had heard of the rocket docket system in forums like the Eastern District of Texas and the International Trade Commission in Washington. Few European judges thought they would live to see it in their life times in their backyards. Instead they, and the litigation lawyers who practise before them, have extolled the virtues of their own national systems bifurcated or not; live trial witnesses subject to cross-examination or not; expert evidence or not. Over the last six or more years this has changed.

The time it has taken could be criticised by some, but wiser heads will see in hindsight it as having been rather fortunate. It has allowed a meeting of minds to take place to a much greater extent than would have been dreamed of even 10 years ago. How has this happened? The consultations and meetings facilitated by the Commission and the EPO have helped. In particular the patent judges conferences have allowed the judges to meet and come to know and respect their colleagues and there has been a greatly increased attention paid to each others views and judgments.

Private practice lawyers in different

By the previous standards of most

European courts, the timetabling will be

brutal. It would also be favourable to the claimants, be that party a patentee or would-be revoker.

Opinion

UPC judges will begin their training in Hungary in February this year

countries have also come to know each other better, from tramping around the courts of the regular patent litigation circuit and through the setting up and work of the European Patent Lawyers Association. All this activity and experience has contributed to a substantial degree of convergence.

So what is the nature of this revolution? At the heart of it is the pan-European injunction and pan-European revocation. The system had to be quick and cost-effective even cheap. Well, the pan-European nature will still there, as is speed, but the cost to the parties? Only time will tell.

The claimants courtBy the previous standards of most European courts, the timetabling will be brutal. It would also be favourable to the claimants, be that party a patentee or would-be revoker. The first to strike will have a double advantage.

Why? Because claimants can have as much time as they like to prepare their case, subject of course to the commercial requirements of speed. That case will have had to set out a full pleading of facts and matters relied on, with the patent claims said to be infringed listed, and the reasons given for that assertion, together with relevant case law and, most importantly, evidence by way of witness statements where available, and an indication of further evidence that will be filed in support. The claimant has to set out all the facts relied on as will amount to infringement of the patent claims, including arguments of law and where appropriate an explanation of the proposed claim interpretation. In addition the claimant must describe any prior proceedings relating to the patents in question, give an indication of which division should hear the action, give an indication as to whether a single judge would do (normally a panel of three) and state whether an interim injunction is asked for. So quite a lot of information to prepare, but also to consider.

Then the pressure is on the defendants. They have to answer all of this, in a like manner, and make any counterclaim, deal with any interim injunction application, challenge jurisdiction

Aleksei Lazukov / Shutterstock.com


and/or apply for security of costs. There may of course also be settlement discussions. The defendants will have to assemble its legal team, carry out prior art investigations and find and interview potential expert witnesses. All in three months. Non-extendable. It will be a challenge for defendants, and their lawyers.

Writing the rule bookThe drafting of the rules is now very well advanced with only a few important topics still up in the air. We all have to bear in mind that fundamental changes to the system are impossible, because the rules are hemmed in by the Unitary Patent Statute and the Agreement. Both are immutable.

The exchange of pleadings and evidence with replies and rejoinders will have to be completed in five months from the start of the proceedings. There will then be the interim conference (CMC), chaired by a Judge Rapporteur (managing judge in English parlance). That single judge will settle the timetable through to trial. It will cover the production of documents, the finalisation of party expert reports, experiments and re-runs. The oral hearing will be within 12 months from the start and limited to 1-2 days. However there is the opportunity to have a separate, earlier, hearing for the cross-examination of witnesses for which there is currently no time limit. A decision on the merits is due in writing within six weeks of the oral hearing.

Significant progress has been in the last 18 months. The nature of the outstanding issues varies. There are some that are fixable during the finalising of the rules. This is likely to happen in the Spring. Others need political input. The former include: The opt-out applicants for opt-outs

will be able to file them before the system comes into force. Each one would then remain on hold until the coming into force of the Agreement. Unresolved is how the fees payable on the opt-out will be paid. This is important since no registration of an opt-out can be made until the fees are paid and there is currently no entity to receive those fees. It has been suggested that registering opt-outs should be delegated to the EPO and not done by the Court. However, the Agreement requires that opt-outs should be lodged in the Registry, meaning the Registry of the Court.

Language of the proceedings before any local or regional division the language shall be an official European Union language which is also the official language, or one of the official languages, of the Contracting Member State hosting the relevant division;

or the official language designated by Contracting Member State sharing a regional division (the Baltic regional division has already said their language will be English). The language of the Central Division will be the language in which the patent was granted. The debate continues as to whether there should be one language throughout, including for the judgment. There are pros and cons. Even the national judges are divided on this.

Injunctions there is a continuing debate concerning the extent of the discretion of the Court. Industry groups want the judges to operate within certain clear guidelines, so that there is a good chance of harmony between the various first instance courts from the beginning. The judges predictably do not want any felter on discretion, with the Court of Appeal ultimately providing co-ordinating guidance. Judge Colin Birss, for one, declared at the Trier consultation meeting on 26 November 2014 that invariably there will be a permanent injunction. The only debate concerns the circumstances in which stays will be granted. It should depend on the facts of the case. He said all the judges are aware of the concerns about trolls.

Procedural appeals there has been a general objection to the suggestion that the Court of Appeal may consult with the first instance panel. If any consultation is done, it should be public.

Appeals (other than procedural ones) commentators have expressed the views

that the court of first instance should decide all issues so that no undecided points go forward as part of an appeal; there should be no ping-pong of appeals and references back.

Actions against the EPO they are required under the present wording of the rules to be dealt with as soon as possible. There has been uncertainty about what the EPOs interlocutory review may mean. It appears that the rules envisage that the EPO can, within one month of the launch of the action, rectify the contested decision in accordance with the order or remedies sought by the claimant.

Recruitment, administrationAs to the political issues, these include the financing of the courts (they are supposed to be self-financing but of course no fees will be generated in time to take on leases or fit out the courts themselves), the fees that will be charged by the UPC at the various stages of actions, and the location of the courts themselves. The UK has been charged with the responsibility for the IT. The relevant civil servants are working hard at this and to a tight timetable (to be ready by December 2015), but all those of us who have had experience of the bringing in of a new IT system will be watching this with some nervousness.

Apparently, the recruitment of judges to the Court of Justice of the European Union is not popular at least among eligible UK practitioners. To the contrary, the UPC has proved to be very popular. Some 1,300 applications have been received and training will start, particularly of those with little or no patent litigation experience, in February 2015. There are the small matters of pay, holidays and pensions to be decided. Unresolved also is whether UPC judges can sit part-time, with the rest of their time spent as national judges. Spain is still challenging the whole constitutionality of the UPC.

As to the coming in to being of the UPC, 2016 is still being talked about; sceptics think 2017 at best.

The Agreement has to be ratified by 13 Member States, including Germany, France and the UK. Of those only France has ratified but UK is going through the Parliamentary motions of doing so. It is unclear what Germany is doing about it. It could just pull the plug on the whole enterprise.

However the momentum is there and most think it is going to happen.

Footnote1. Winston & Strawn Seminar on the UPC, 1

October 2014

Opinion

Only France has ratified but UK is going through the

Parliamentary motions of doing so. It is

unclear what Germany is doing about it. It could just pull the plug on the whole

enterprise.


Julia Venner

The unitary patent and the Unified Patent Court an updateAfter four decades of development, legal challenges and false-starts, it seems that a unified EU patent system is imminent. Alexander Korenberg and Julia Venner review

After decades of wrangling, the unitary patent (UP) and Unified Patent Court (UPC) looks set to become a reality. The last year or so has seen great strides towards the implementation of the new legal system and, while uncertainties remain, it looks likely that it will be in place by 2017.

This article will provide an overview of these great strides, some remaining concerns, and a summary of where we currently stand in relation to this potentially game-changing development.

The Spanish challengeOne potential threat to the new system, a second Spanish challenge to the legality of the UP, would appear to be fading. On 31 May 2013, Spain filed two cases before the Court of Justice of the European Union (CJEU), seeking annulment of the regulations forming part of the new patent package on the grounds that they lack legal basis, delegate too much power away from the EU and require a discriminatory language regime, among other objections.

The Advocate-General issued a non-binding opinion in November 2014 asserting that both challenges should be dismissed, declaring that:

The unitary protection conferred provides a genuine benefit in terms of uniformity and integration, while the choice of languages reduces translation costs considerably and safeguards better the principle of legal certainty.

The CJEU follow the decision of the Advocate-General around 80% of the time and it would

be surprising if it was not followed in this case, particularly given the political momentum behind the new system and the fact that the comments of the CJEU on the legality of the procedure used to create the UP (provided in response to an earlier legal challenge by Spain and Italy), were taken into account when designing the new system. The final decision is expected in early 2015.

Ratification of the UPC AgreementIn order for the UPC to come into effect, the UPC Agreement must be ratified by 13 contracting member states, including the UK, France and Germany. Thus far, the Agreement has been ratified by Austria, Belgium, Denmark, France, Malta and Sweden. It is therefore necessary for seven more countries to ratify the Agreement, including the UK and Germany.

With regard to Germany, it is reported that ratification is unlikely to take place until all of the other necessary ratifications have occurred and all of the preparations for the UPC have been completed, which is unlikely to be before 2016. Progress is being made towards ratification in the UK, following the passing of the Intellectual Property Act 2014, which provides the legal framework to bring the UPC Agreement into effect in the UK.

Based on an informal poll of our correspondents across Europe, headway is also being made in Finland, where a government bill will be put before the new parliament in the autumn of 2015, and in Ireland, which will hold a referendum of the Irish electorate next year to amend the constitution, allowing

ratification to take place. It is also likely that the Agreement will be ratified in Hungary, Lithuania and the Netherlands sometime in 2015.

There has been little or no apparent progress towards ratification in the Czech Republic, Cyprus, Greece, Italy, Romania and the Slovak Republic. Developments in Bulgaria, Estonia, Portugal and Slovenia have been hard to gauge due to a lack of publicly-available information.

In summary, with nearly half of the necessary 13 countries having ratified the Agreement, and the other half looking set to do so within a year or so, it would appear that the ratification process is unlikely to hold up implementation once all of the remaining preparations are completed.

Setting up the UPC courts and judgesWithin the UPC, the Court of First Instance (CFI) will comprise a central division (based in London, Paris and Munich) and a number of local and regional divisions. So far, single local divisions are expected in Austria, Belgium, Denmark, England & Wales, France, Finland, Italy, Ireland and the Netherlands. No fewer than four local divisions are planned for Germany (in Dsseldorf, Mannheim, Munich and Hamburg). A Nordic-Baltic regional division comprising Estonia, Latvia, Lithuania and Sweden is planned, while Bulgaria, Romania, Greece, Cyprus and Slovenia are also considering establishing a regional division.

One of the primary concerns regarding the new legal system is the qualifications and experience of the judges who would

PATENT FILE

Alexander Korenberg is a European and chartered patent attorney with clients across Europe and is a partner at Kilburn & Strode, a top-tier European firm of patent and trademark attorneys based in London. Julia Venner is a European and chartered patent attorney and an associate at Kilburn & Strode.

Opinion

Alexander Korenberg


preside over cases before the UPC. However, a dedicated training centre for the UPC was officially opened on 13 March 2014 in Budapest, which will function as a co-ordinating office for the training of judges and candidate judges. Shortly after, the UPC Preparatory Committee approved a list of almost 700 candidates deemed suitable to become legal and technical judges in the UPC.

Rules of ProcedureOn 31 October 2014, the Preparatory Committee for the UPC issued the 17th version of the draft Rules of Procedure. Among other things, this latest version provided some clarification regarding the procedure for opting patents out of the jurisdiction of the UPC, the language regime, the extent to which infringement and validity proceedings are likely to be bifurcated and judicial discretion for granting remedies.

Opting out Rule 5, which will allow a patentee to opt a standard European patent out of the jurisdiction of the UPC during a transitional period, has been clarified in a number of ways. First, a 30 day time period has been introduced for the payment of the opt-out fee, following the filing of an application to opt-out. Secondly, an amendment to Rule 5.7 clarifies that an action before the UPC (even if concluded) represents an absolute bar to the opting-out of a patent involved in that action. Similarly, an action before a national court (even if concluded) represents an absolute bar to the withdrawal of any opt-out of a patent involved in that action. Finally, because it is not possible for a UP to avoid the jurisdiction of the UPC, new Rule 5.10 provides that the patentee shall notify the registry if a patent application which has been opted out of the UPC subsequently grants as a UP. The opt-out will then be deemed to have been withdrawn in respect of the contracting member states covered by the UP. There are, however, still concerns regarding the complexity of the opt-out procedure, the lack of detail in respect of some of the provisions and the ability of the register to handle the likely flood of opt-out applications.

Language regimeOne potentially controversial amendment to the proposed language regime provides for a possible partial use of an additional language. Rule 14.2(a) contains the principle that the plaintiff decides the language of the proceedings by choosing from among the languages designated by the local or regional division. New Rule 14.2(c) provides that parties (including defendants) may use an additional

designated language for a preliminary objection, written pleadings and oral hearings. In effect, this rule will allow proceedings to be conducted in two languages, in a similar manner to some European Patent Office opposition proceedings. However, it is currently unclear whether these provisions will be included in the final version of the Rules of Procedure.

BifurcationBifurcation of infringement and validity proceedings is a distinct possibility under the new legal system, where local or regional divisions handling infringement proceedings can refer a counterclaim of revocation to the central division. The latest draft of the rules provide that, where a case is bifurcated and the infringement proceedings are not stayed, the revocation proceedings shall be accelerated by the central division, who shall endeavour to set a date for oral proceedings on the revocation action prior to that for the infringement action. This is generally considered to be a welcome development, reducing the threat of an injunction gap. Still, effectiveness of this provision remains to be seen, since the use of the non-committal phrase shall endeavour in the revised Rule 40 could limit its impact in practice.

Judicial discretionAn amendment to Rule 118 has also clarified that a court can, at its discretion, order the payment of damages or compensation instead of granting an injunction. Previously, such remedies were only to be available if the infringer had acted both unintentionally and without negligence, provisions which would only vary rarely apply in practice. This change means that injunctions will not automatically be granted if there is a finding of infringement, which could make the UPC rather less attractive to patentees.

The final draft of the rules is expected to be agreed in the spring of 2015 and will represent a major step forward in the implementation of the UPC.

Remaining concernsThe Maltese problemThe participation of Malta in the new legal system has potentially important implications for the granting of UPs. A literal interpretation of the wording of Article 3(1) of the UP regulation would mean that a patent could only have unitary effect if it is granted with the same set of claims in respect to all of the participating member states of the regulation. This includes Malta, which only became a member of the European Patent Convention (EPC) on 1 March 2007. As a

result, any patents filed before that date will not have legal effect in Malta. This could potentially restrict unitary effect to European patent applications filed on or after 1 March 2007.

A further potential complication arises from the fact that Croatia only became a fully contracting member state of the EPC on 1 January 2008. Prior to that, it was an extension state, to which European Patent Applications could be extended upon request. If Croatia decides to take part in the UP and UPC, a literal interpretation of Article 3(1) would mean that it will not be possible to request unitary effect for a European patent filed before 1 January 2008, unless the patentee had the foresight to extend the patent application to Croatia.

This critical date could shift even further forward, were a new country to join the EPC and subsequently the EU, UPC and UP. Some clarification will certainly be required regarding how Article 3(1) is to be interpreted, in practice.

FeesAnother concern regarding the new legal system is the cost, including the level of the single, annual renewal fee that will be payable for a UP. An announcement is not expected until June 2015, but it is anticipated that this renewal fee will be equivalent to the cost of renewing a standard European patent in the five most popular European states. As this would include Germany, which has relatively expensive renewal fees, there are concerns that the cost of renewing a UP might put many patentees off the new system. This is particularly true given than about half of all European patents are currently validated in fewer than five states (often including Italy and Spain, which remain outside the UP and would therefore incur additional cost to cover), a scenario which seems likely to remain cheaper using the current validation system than obtaining a UP. It remains to be seen if the concerns are heeded by the Select Committee when the fees are set.

CommentAfter four decades of development, numerous legal challenges and many false-starts, it would appear that a unified EU patent system is imminent. Several issues still have the potential to derail the system, not least the threat of the UK leaving the EU following a referendum proposed for 2017. Yet, this is certainly the closest we have ever been to implementing the UP and UPC and the biggest change to the European patent system in most of our working lives may be just around the corner.

Opinion


Charles T Steenburg

Commil v CiscoThe US is in the midst of rethinking defences to inducement of patent infringement. Charles T Steenburg examines the case

The Supreme Court of the US (SCOTUS) upcoming decision in Commil USA, LLC v Cisco Systems, Inc, may restrict the options of defendants charged with inducing patent infringement under 35 USC section 271(b). On its face, Commil presents a narrow issue: whether a defendants belief that a patent is invalid constitutes a defence to inducement. However, lurking below is a broader question: whether a defendant should be liable for inducing infringement if the defendant knew about the asserted patent and the patent owners view that the defendant was encouraging infringement, but the defendant reasonably disagreed.

Under current law, a good-faith belief can immunise a defendants past conduct, even if courts ultimately side with the patent owner and determine that the activities in question actually had caused others to directly infringe the patent. For instance, a defendant that instructs customers to use products in a particular way is not necessarily liable under section 271(b), even if (1) the patent owner had previously warned the defendant that the method described in the instructions was covered by a patent; and (2) courts ultimately agreed with the owners understanding. This specific intent requirement has renewed interest in formal opinions of counsel.

However, the US Patent and Trademark Office (USPTO) has suggested the alternative of holding inducers liable as a matter of course, if they were aware of a patent in question and encouraged acts later deemed to infringe (regardless of what the defendant believed about those acts). If SCOTUS takes this approach, it would lessen the value of opinions.

Commil could also have significant impacts even if the court focuses only on the letter of the question presented. While clear in theory, the distinction between non-infringement and invalidity can be fuzzy in practice.

Why inducement matters Inducement is a type of indirect infringement. Unlike direct infringement, inducement does not require that the defendant make, use, sell, offer to sell, or import a patented product or method. Further, unlike contributory infringement, defendants can be liable even for selling basic staples if they encourage customers to use them in a way that constitutes infringement.

From the perspective of many patentees, inducement offers a crucial fallback when direct infringement claims are not practical. For example, inducement theories offer a way to: Enforce patents in which the only direct

infringers are individuals (eg, purchasers of a particular product) and/or immune from infringement claims (eg, doctors allegedly infringing medical method claims);

Target the source of infringing products even though the manufacturer sells the products abroad to various importers; and

Pursue individual executives personally in case their company is undercapitalised.

From this perspective, a state-of-mind requirement creates a loophole for bad actors.

By contrast, accused infringers tend to cast inducement as a disfavoured theory, that allows patentees to extort money from innocents and/or cover up mistakes that applicants made in the patent drafting process.

In practice, the truth lies somewhere in the middle. Inducement theories can be critical for patent owners when facing knockoff artists who seek to exploit technicalities. Yet, section 271(b) can also be abused. Indeed, one of the underlying challenges with inducement is that it spans so many different types of scenarios and offers both sides an array of talking points.

Key inducement cases prior to Commil DSU and its progenyIn 2006, the US Court of Appeals for the Federal Circuit (Federal Circuit) resolved an earlier split and held that inducement requires more than encouraging a third party to take acts that constitute direct infringement. The DSU Medical Corp v JMS Co, (DSU) decision en banc in relevant part held that section 271(b) requires evidence of culpable conduct, directed to encouraging anothers infringement rather than mere knowledge of the direct infringers activities.1

For this reason, the Federal Circuit found sufficient evidence to support a jury verdict in favour of the accused inducer. In particular, the defendant had obtained several non-infringement opinions of counsel. Notably, however, the jury had found that the product in question actually did infringe. In other words, the jury found that the opinions of counsel were wrong.

DSU led many companies to consider and patent lawyers to recommend obtaining opinions of counsel in more situations than

PATENT FILE

Charles T Steenburg is a shareholder at the intellectual property firm Wolf, Greenfield & Sacks, in Boston, Massachusetts.

Opinion

Commil could also have significant

impacts even if the court focuses only on the letter of the

question presented. While clear in theory,

the distinction between non-infringement and invalidity can be fuzzy

in practice.


previous conventional wisdom would have dictated.

Global-Tech AppliancesThe SCOTUS 2011 Global-Tech Appliances, Inc v SEB SA, (Global-Tech) decision2 also concerned inducement, but with a different twist. Unlike the accused inducer in DSU, the defendant in Global-Tech did not claim to have an opinion concerning the relevant patent or otherwise believe that its products did not infringe. The defendant instead pled ignorance that the asserted patent even existed, notwithstanding that the defendant had copied the patent owners product a fact it hid from the attorney who had been responsible for conducting a right-to-use study. Unaware of the patent owner itself, the attorney failed to locate the applicable patent. The defendant in turn relied on its purported lack of knowledge as a defence to inducement.

With these damning facts, the jury found the defendant liable under section 271(b). The Federal Circuit affirmed, holding that a defendant can be liable for inducement if it should have known about the asserted patent and the alleged infringement. In particular, the Federal Circuit stressed that the defendant had deliberately disregarded a known risk that the developer of the original product (which the defendant had copied) had a relevant patent.

SCOTUS affirmed the result, albeit on a slightly different basis. First, the court emphasised that it is not enough for the accused inducer to lead another to engage in conduct that happens to amount to infringement. Inducement instead requires knowledge that the induced acts constitute patent infringement. However, the court held that willful blindness can be a basis for finding such knowledge. In essence, that requires a defendant to bury its head in the sand.

The Commil caseIn Commil v Cisco, SCOTUS faces a scenario closer to DSU than Commil. Instead of focusing on infringement, however, Cisco proffered evidence to support its purportedly good-faith belief that Commils patent is invalid. The trial court judge refused to allow Cisco to present such evidence to the jury. However, the Federal Circuit reversed and ruled that Ciscos evidence was admissible. Citing DSU, the decision found no principled distinction between a good-faith belief of invalidity and a good-faith belief of non-infringement for purposes of inducement.3

Commil asked SCOTUS to reverse the Federal Circuits decision and hold that

beliefs concerning invalidity are immaterial to inducement. The court later invited the government to file a brief expressing the views of the US. The Solicitor General and the USPTO recommended that the court grant review and hold that a defendants belief as to the invalidity of a patent is not a defence, if the defendant is charged with inducing infringement.

SCOTUS subsequently accepted the case for review. As of this writing, the parties have not filed their merits briefs. Oral argument will likely occur in March or April, with a decision by June.

Potential outcomes and action items There are three basic ways in which SCOTUS could resolve Commil v Cisco on the merits.

Confirm the Federal Circuits decision. First, the court may confirm the Federal Circuits holding that a defendants beliefs concerning invalidity can be relevant to inducement. Although this is a possibility, SCOTUS typically does not review Federal Circuit decisions with an eye toward affirming them. In Global-Tech, however, the court affirmed the result while stressing that willful blindness is the only alternative to actual knowledge, thereby making it somewhat harder to prove inducement than it would have been under the Federal Circuits standard.

If SCOTUS affirms the Federal Circuit, it will confirm the ability to emphasise ones best defences in opinion letters, even if those positions concern validity or other defences aside from non-infringement.

Reject the Federal Circuits decision. Alternatively, SCOTUS may reject the Federal

Circuits holding and draw a rigid line between infringement and validity, yet confirm the comment in Global-Tech that section 271(b) requires knowledge that the induced acts constitute patent infringement.

If so, patent attorneys would start considering whether particular invalidity opinions could be converted into non-infringement opinions. This may be easier than it sounds. In particular, opinions could invoke the cannon of construction that claims normally should not be construed in a way that renders them invalid.4 This maxim has fallen out of favour with the Federal Circuit, but has never been officially repudiated. On the other hand, a rigid distinction could make it harder for alleged inducers to rely on exculpatory testimony from employees or agents aside from trained attorneys. Laypeople often lump validity and infringement considerations together. In one recent case, for example, an executive had testified that he had not viewed the asserted patents as presenting a barrier, because he thought that the relevant products simply practised the prior art. The jury found no inducement. The Federal Circuit affirmed, finding that the testimony was relevant under DSU despite the general rule that practising the prior art is no defense to infringement.5

Change direction. The final scenario is that SCOTUS could revisit Global-Tech and in particular the hold[ing] that induced infringement under section 271(b) requires knowledge that the induced acts constitute patent infringement. Global-Tech itself did not squarely present the issue. In asserting that it never even knew the patent existed, the accused inducer effectively conceded that it would be liable for inducement if the courts found otherwise.

The USPTOs brief in support of Commils petition suggests that it would welcome such a change at some point, but not necessarily now, given the cases procedural posture.

If SCOTUS does revisit Global-Tech, it could effectively overturn DSU and make it significantly easier for patent owners to prove inducement.

Footnotes1. 471 F3d 1293 (Fed Cir 2006) (en banc in relevant

part).2. 131 S Ct 2060 (2011). 3. Commil USA, LLC v Cisco Systems, Inc, 720 F.3d

1361 (Fed Cir 2013).4. Eg, Harris Corp v IXYS Corp, 114 F 3d 1149 (Fed

Cir 1997).5. Kinetic Concepts, Inc v Blue Sky Med Group, 554

F 3d 1010 (Fed Cir 2009).

Opinion

If SCOTUS affirms the Federal Circuit, it will confirm the

ability to emphasise ones best defences

in opinion letters, even if those positions

concern validity or other defences aside from non-infringement.


Jean-Charles Grgoire

Door opened for medical use claims in Canada A Canadian Federal Court has rejected hitherto guidelines on unpatentable methods of treatment, such as fixed drug dosage schedule. Jean-Charles Grgoire explains

The Canadian Intellectual Property Office (CIPO) released examination guidelines in 2013 titled Examination Practice Respecting Medical Uses (PN2013-04).1

The guidelines affirmed CIPOs long-standing position that methods of medical treatment are unpatentable. The guidelines went on to explain that medical use claims are generally permitted, as long as they do not equate to a medical or surgical method (eg do not include an active treatment or surgical step) that would prevent physicians from exercising their skill and judgment. However, the guidelines took the position that claims that include a dosage regimen, or restrictions on how and when to administer a drug, cover an unpatentable method of medical treatment. In a recent case, the Federal Court has criticised those guidelines.

In AbbVie Biotechnology Ltd v Canada (AG) (2014 FC 1251), the Federal Court considered an appeal of a refusal of the Commissioner of Patents to grant a patent on claims to a fixed dosage and schedule. In refusing the claims at issue (syringe claims, Swiss claims, and use claims), the Commissioner cited the examination guidelines as setting out the Offices interpretation of case law pertaining to medical use claims.

The Commissioner argued that the claims were unpatentable in view of case law, on the basis that they would place restrictions on how and when to administer a drug. The Federal Court rejected the argument, and instead held that claims for a fixed dosage and schedule do not automatically

PATENT FILE

Jean-Charles Grgoire is an associate at Marks & Clerk in Ottawa, Canada. He is a registered Canadian patent agent, and is registered to practice before the United States Patent and Trademark Office on behalf of Canadian clients. He is a member of the Intellectual Property Institute of Canada, and sits on the Joint Liaison Committee on Industrial Designs. Jean-Charles is also a member of the International Association for the Protection of Intellectual Property and American Intellectual Property Law Association (AIPLA); the Law Society of Upper Canada (Ontario); and the Association des juristes dexpression franaise de lOntario.

Opinion

The court held that claims to a

fixed dosage, and/or a fixed dosage

schedule or interval, are not unpatentable subject matter where there is no evidence

to contradict that claimed dosage.

constitute unpatentable subject matter. The court held that claims to a fixed dosage, and/or a fixed dosage schedule or interval, are not unpatentable subject matter where there is no evidence to contradict that claimed dosage, ie no evidence that adjustments requiring skill and judgment are needed.

The court held that the issue remains whether the claims cover a method of medical treatment that prevents physicians from exercising skill and judgement. The court considered that the Commissioners focus on how and when to administer a drug was misplaced. To the extent that the Commissioner sought to advance new policy as set out in the examination guidelines for

rejecting subject matter, the court considered that he went too far.

Applying the foregoing to the claims at issue, and distinguishing from the case law, the Federal Court found there was no evidence to suggest that the dosage would not be fixed as claimed, and that adjustments requiring skill and judgment would be needed as a result. Accordingly, the Commissioner was not justified in finding that the claims sought to patent the exercise of skill and judgment, and thus constitute an unpatentable method of medical treatment. In the result, the Federal Court directed the Commissioner to allow the claims. The Commissioner has 30 days to appeal the Federal Court decision.

In view of the decision, it appears that applicants are free to pursue medical use claims that include a (fixed) dosage regimen or restrictions on how and when to administer a drug, absent evidence that such claims would prevent physicians from exercising skill and judgment.

Footnote1. http://www.cipo.ic.gc.ca/eic/site/cipointernet-

internetopic.nsf/eng/wr03656.html

Farah Mukaddam

Shape of childs chair not registrable as a trademarkAvoid the Tripp trap! Farah Mukaddam discusses the CJEU ruling on the validity of shape marks in Hauck v Stokke and Ors

TRADEMARK TALK


In the European Union, a three dimensional shape can be protected by registering it as a trademark or design. Registering a trademark is generally considered a more attractive option, as registered trademarks confer indefinite protection (provided that the mark is put to genuine use and the renewal fees are paid), whereas registered design rights are time limited.

To prevent companies obtaining an indefinite monopoly over technical solutions or functional characteristics of products and to prevent trademark registrations being used to extend other rights, which the EU legislature had specifically sought to limit, Article 3(1)(e) of the Trade Marks Directive sets out certain absolute grounds for refusal or invalidity of shape trademarks.

In a long-awaited ruling on the interpretation of two of those absolute grounds, the Court of Justice of the European Union (CJEU) has held: The Article 3(1)(e)(i) exclusion (relating to

the nature of the goods themselves) will not apply to a shape which includes a decorative or imaginative element, which plays an important or essential role in the goods and which is not inherent to the generic function of the goods.

However, in respect of the Article 3(1)(e)(iii) exclusion (relating to substantial value), a product which has functional characteristics as well as an aesthetic purpose may still be caught if these characteristics give the product significant value.

The CJEU also confirmed that the absolute grounds are mutually exclusive and cannot be applied in combination. As a result, obtaining trademark protection for shapes of products is certainly not getting any easier.

Legal backgroundThe relevant grounds of refusal and invalidity are set out in Article 3(1)(e) of the Trade Marks Directive,1 which states that signs which consist exclusively of any of the following elements shall not be registered as a trademark, or if registered shall be liable to be declared invalid: The shape which results from the nature of

the goods themselves (the first exclusion), or

The shape of goods which is necessary to obtain a technical result, or

The shape which gives substantial value to the goods (the third exclusion).

The dispute Stokke, a Norwegian manufacturer of childrens furniture and accessories, brought a childs chair to the Dutch market called Tripp Trapp. Stokke subsequently registered a Benelux trademark for a three dimensional mark resembling the Tripp Trapp chair for chairs, especially high chairs for children, which was represented as illustrated below, (see Figure 1).

Figure 1

A rival German manufacturer, Hauck, also manufactured, distributed and sold childrens articles including two chairs, which were similar to the Tripp Trapp chair called Alpha and Beta.

Stokke commenced legal proceedings in the Netherlands before the Rechtbanks Gravenhage (district court), claiming that Haucks activities with respect to the Alpha and Beta chairs infringed copyright in the Tripp Trapp chair and the Benelux shape trademark. Hauck counterclaimed that the Benelux trademark registration was invalid, relying on Article 3(1)(e) of the Trade Marks Directive.

The district court upheld Stokkes claim of copyright infringement. However it also declared that the Benelux shape trademark was invalid.

Hauck appealed the decision to the Gerechtshof te s-Gravenhage (Dutch Court of Appeal). In its judgment, the Court of Appeal held that the Tripp Trapp chair was protected by copyright and that Haucks Alpha and Beta chairs infringed that copyright. However, the Court of Appeal also upheld the declaration of invalidity of the Benelux shape trademark, as the shape was determined by the very nature of the product (ie, a safe, comfortable, reliable childs chair) and the design of the Tripp Trapp chair gave the product substantial value.

On appeal to the Hoge Raad der Nederlanden (the Supreme Court of the Netherlands), the court referred certain questions on to the CJEU. The questions and the CJEUs decision are summarised as follows.

CJEU decisionQuestion1: Does the first exclusion (relating to the nature of the goods themselves) apply to a shape which is indispensable to the function of the

Farah Mukaddam is an associate specialising in IP in the London office of Norton Rose Fulbright.

Opinion


goods only, or can it also refer to a shape with one or more substantial functional characteristics that consumers may possibly look for?The CJEU first recalled that it was already established that the absolute grounds of refusal or invalidation set out in Article 3(1)(e) must be interpreted in light of the public interest considerations underlying each of them, which were to prevent trademarks creating a monopoly over functional characteristics and to prevent trademark registrations being used to extend other rights that the EU legislature had specifically sought to limit.

With that in mind, the CJEU held with respect to the first exclusion: The national court must first identify the

most important (or essential) characteristics of the sign. Applying Lego Juris A/S v OHIM & MEGA Brands, Inc, the assessment could be based on the overall impression of the sign or by examining each of the components of the sign in turn.

The first exclusion does not apply to shapes that include a decorative or imaginative element, which plays an important or essential role in the goods and which is not inherent to the generic function of the goods. If the provision were to apply to such shapes, this would leave the manufacturer with no creative freedom to make a personal essential contribution to the goods. This would in effect render the prohibition redundant as it would mean that the first exclusion would only apply to natural products (which have no substitute) and regulated products (where the shape is prescribed by legal standards), even though such shapes could not be registered given their lack of distinctive character.

The concept of a shape which results from the nature of the goods themselves includes shapes with essential characteristics, which are inherent to the generic function(s) of the goods. Reserving such characteristics to a single manufacturer would make it difficult for competitors to make their goods in a shape which would suit the purpose for which they were intended. Moreover, consumers would be looking for those characteristics in products of competitors.

Question 2: Does the third exclusion (relating to substantial value) apply to the shape being the predominant value in the product only, or does it also apply where other characteristics exist which give the product substantial value? What is the relevance of the perception of the public?The CJEU held that: The third exclusion would apply to shapes

of products which have essential functional characteristics, as well as a significant aesthetic element, which give the product significant value. Otherwise, it would be possible for a proprietor to obtain a monopoly with regards to the essential characteristics of the products, contrary to the underlying objectives of the provision.

Following Lego Juris, the presumed perception of the sign by the average consumer is not decisive but may be one of the relevant criteria for identifying the essential characteristics of the sign.

Question 3: Can the two grounds of invalidity under Article 3(1)(e)(i) and (ii) be applied in combination?The CJEU held that the fact that the three grounds for refusal set out in Article 3(1)(e) were set out as successive points, coupled with the word exclusively, was indicative that each ground must be applied independently of the others.

In answer to the third question, the CJEU held that the grounds of refusal set out in the first and third indents of the Article 3(1)(e) are mutually exclusive and may not be applied in combination.

ImplicationsThe decision provides some clarity and guidance on when shape marks will fall within the grounds for refusal or invalidity.

It is clear that the first exclusion will not apply if the shape of the product includes a decorative or imaginative element, which plays an important or essential role in the goods and which is not inherent to the generic function of the goods.

However, a shape of product that has functional characteristics as well as an aesthetic purpose may still be caught by the

third exclusion, if these characteristics give the product significant value.

It is anticipated that, for these reasons, the Tripp Trapp chair will fall outside the scope of the first exclusion (it has bespoke/unique design), but that it might be caught by the third exclusion given it also has various functional purposes (eg, safety, comfort and reliability).

The CJEU also confirmed that the absolute grounds are mutually exclusive and cannot be applied in combination. This would seem a logical conclusion as it is difficult to perceive a situation where a shape includes characteristics which are inherent to the generic function of the goods, but those same characteristics give the goods significant value.

Questions remainingLeaving aside the guidance given, the judgment raises a number of questions which were not answered by the CJEU: With regards to the first exclusion, how

is an essential characteristic inherent to the generic function of a product to be assessed?

Furthermore, the assessment of the important characteristics of the goods could be based on the overall impression of the sign or by examining each of the components of the sign in turn. When is it appropriate to consider the individual elements of the sign as opposed to the overall impression? It is noted that the discretion is in contrast to the requirements under Articles 1(b), 4 and 5 (ie, when considering the distinctiveness of a sign or its similarity to another sign) where the overall impression of the mark must be considered. This has the potential to create inconsistencies where different assessments are deployed in the contexts of registrability and infringement.

With regards to the third exclusion, the CJEU held that other characteristics, may also give the product significant value. Is there a difference between substantial (as per the wording of Article 3(1)(e)(iii)) and significant as expressed by the CJEU?

Moreover, it is unclear how a trademark for the shape of a product will give a monopoly over the functional characteristics, if these characteristics are derived from features other than shape.

It remains to be seen how this ruling will be applied by the Supreme Court of the Netherlands.

Footnote1.http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:31989L0104:en:HTML

The decision provides some

clarity and guidance on when shape marks

will fall within the grounds for refusal

or invalidity.

Opinion

Abby Minns, Osborne Clarke

Solving the Rubiks Cube challengeThe EU General Court held that the 3D puzzles shape mark is a valid trademark. Osborne Clarkes Abby Minns takes a look

TRADEMARK TALK


In a battle between Seven Towns, the owner of the Rubiks Cube shape mark registration, and Simba Toys (Simba) that has lasted for over eight years, the owner of the Rubiks Cube mark has come out on top. In November 2014, the EU General Court upheld an earlier decision of the Second Board of Appeal, that Simbas application for a declaration of invalidity should not be granted and rejected the appeal on every ground.

Traditionally, shape marks offer limited scope and there are several measures built-into the Community Trade Mark Regulation in order to prevent 3D marks being given too broad protection. However, this decision will be of interest to rightsholders with goods that incorporate a shape which distinguish their goods as those originating from the rightsholder, as it demonstrates some of the circumstances in which a shape mark registration may be successful.

Background to the proceedingsSeven Towns filed an application for registration of a Community trademark (CTM) on 1 April 1996, for the 3D mark (the Mark) shown in Figure 1.

Registration of the mark was applied for in Class 28 for three-dimensional puzzles. In November 2006, Simba applied for a declaration of invalidity of the mark. By its decision of 14 October 2008, the Cancellation Division at the Office for Harmonization in the Internal Market (OHIM) rejected the application for a declaration of invalidity in its entirety. Simba appealed this decision and in a decision dated 1 September 2009, the Second Board of Appeal maintained the decision of the Cancellation Division and dismissed the appeal.

Abby Minns is a senior associate in the IP litigation team at Osborne Clarke. Abby advises on a wide range of intellectual property law and has experience of a broad range of IP disputes covering a number of different sectors.

Opinion

This decision will be of interest to rightsholders with goods that

incorporate a shape which distinguish

their goods as those originating from the

rightsholder, as it demonstrates some of the circumstances

in which a shape mark registration may be

successful.

Grounds relied on by Simba at the General CourtIn its appeal to the General Court, Simba relied on the following grounds: Article 76(1) of Regulation No 207/2009

which provides that in proceedings before it the office shall examine the facts of its own motion; however in proceedings relating to relative grounds for refusal of registration, the office shall be restricted in this examination to the facts, evidence and arguments provided by the parties and the relief sought. Simba alleged that the Board of Appeal infringed the first part of Article 76(1) in its decision.

Article 7(1)(e)(ii) of Regulation No 40/94 which states the following shall not be registered signs which consist exclusively of the shape of goods which is necessary to obtain a technical result.

Article 7(1)(e)(i) of Regulation No 40/94 states that signs which consist exclusively of the shape which results from the nature of the goods themselves shall not be registered.

Article 7(1)(e)(iii) of Regulation No 40/94 notes that signs which consist exclusively of the shape which gives substantial value to the goods shall not be registered.

Article 7(1)(b) of Regulation No 40/94 holds that trademarks which are devoid of any distinctive character shall not be registered.

Article 7(1)(c) of Regulation No 40/94 states that the following shall not be registered trademarks which consist exclusively of signs or indications which may serve, in trade, to designate the kind, quality, quantity, intended purpose, value, geographical origin or the time of production of the goods or of rendering of the service, or other

Figure 1


characteristics of the goods or service. Article 7(3) of Regulation No 40/94

highlights that Paragraph 1(b), (c) and (d) shall not apply if the trademark has become distinctive in relation to the goods or services for which registration is requested in consequence of the use which has been made of it. Simba complained that the Board of Appeal did not decide whether the Mark had acquired distinctive.

The first sentence of Article 75 of Regulation No 207/2009 which states decisions of the Office shall state the reasons on which they are based.

This comprehensive set of grounds of appeal was comprehensively rejected.

Does the Rubiks Cube mark consist of a sign which consists exclusively of the shape of goods, which is necessary to achieve a technical result (Article 9(1)(e)(ii))?The General Court explained that the wording of Article 9(1)(e)(ii) reflects the balance of two conflicting considerations. This first is that the exclusion from registration of a sign that consists of the shape of goods necessary to obtain a technical result, ensures that undertakings may not use trademark law in order to perpetuate indefinitely exclusive rights relating to technical solutions. Secondly, the fact that the ground is restricted to signs which consist exclusively of the shape of goods, which is necessary to obtain a technical result, accounts for the fact that any shape of goods is to a certain extent functional and that it would therefore be inappropriate to refuse to register the shape of goods as a trademark, solely on the grounds that it has functional characteristics.

The General Court agreed with the Board of Appeal in its finding that the essential

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characteristics of the mark do not perform a technical function of the goods concerned. According to the Board of Appeal, the cubic grid structure gives no indication as to its function. The General Court rejected Simbas arguments under this ground noting that they were based on knowledge of the rotating capability of the vertical and horizontal lattices

of the Rubiks Cube, but that capability cannot result from the black lines in the mark. As a result, the Board of Appeal cannot be criticised for not having included an invisible element in its analysis.

Other groundsThe General Court also held that the nature of the goods, being 3D puzzles, in no way requires that those goods have the shape of a cube with a surface that has a grid structure, therefore the shape did not fall foul of Article 7(1)(e)(i).

Further, the mark was not devoid of distinctive character (under Article 7(1)(b)) since the applicant had not established that the shape in question constitutes the norm in the sector of 3D puzzles.

The General Court noted that, Even if the shape in question were perceived by consumers as representing a 3D puzzle, it would still only be associated with a specific product namely the Rubiks Cube and not with a generic sub-section of 3D puzzles.

An extension of the scope of shape marks?Shape marks can be a useful IP right for a business since they provide a potential perpetual monopoly in relation to the shape of a product and so can be a used to prevent the sale of similar products. However, due to the

The General Court agreed with

the Board of Appeal in its finding that

the essential characteristics

of the mark do not perform a technical

function of the goods concerned.


potential for this to be exploited and prevent competition, there are safeguards within the legislation to prevent this monopoly extending to, for example, shapes which cover technical functions and which are the result of the nature of the goods themselves.

Recent cases have demonstrated the difficulty in obtaining registration for a shape mark as shown by the decision in Lego Juris A/S v OHIM & MEGA Brands, Inc.1 In this case, Legos registration for a 3D mark consisting of the upper surface and two sides of a Lego brick was held to be invalid, since the shape of the mark was necessary to perform a technical function. The Court of Justice of the European Union explained that the purpose of Article 7(1)(e)(ii) is to prevent the granting of a

Documents

IPM February 2015 Secured